Benefit companies vs B-Corp: an Italian legal form toward sustainability
Written by Prof. Angelo Russo, LUM University
laian Three years have passed since the establishment in Italy of the Benefit Company (i.e., Società Benefit) with the 2016 Stability Law, the Italian counterpart of the so-called benefit corporations, better known as B-corp. This is an important step towards defining an innovative model of doing business in Italy, placing new responsibilities at the center of the business strategy. So what are B-corps?
Like what happens in the United States, "profit" companies will now also be able to bear the name B-corp (or better, benefit companies, according to the terminology of the stability law) in Italy. An indispensable condition, however, is the indication in the statute not only of the usual intent of economic profit, but also of the intent to generate social and / or environmental profit. Some considerations are necessary in this regard.
Starting from the form, it is interesting to note that no distinction is made on the basis of the legal nature of the companies: of people, of capitals, cooperatives, etc., all companies will have the opportunity to pursue this path, provided that you submit to a whole series of constraints and responsibilities of a substantial nature.
Going therefore to the substance, we try to emphasize the aspects to be considered innovative.
First of all, benefit company is not a certification. Too often sustainability and all its related activities and tools are considered reductive as a certification: false. You don't have a strategic orientation towards sustainability just because you are certified, for example, SA8000! Or even worse, you are not sustainable just because you draw up a social, environmental or sustainability report! The benefit company goes in this direction. To be able to take advantage of the connotation of benefit companies, in addition to the clear indication in the articles of association, it will be necessary to finalize strategic decisions that lead to social and / or environmental results. Benefit companies therefore assume wider responsibilities which will be subject to verification by the directors or sustainability managers (also clearly identified in the articles of association). If the pre-established objectives are not achieved, the benefit company will expose itself not only to the owners, but to a whole series of subjects directly or indirectly connected to the business activity (collaborators, customers, suppliers, etc.). The legislation, in fact, did not provide benefits for those companies that decide to pursue this path: there are no tax reliefs, there are no financial concessions. In essence, we assume social and / or environmental responsibilities that go alongside the natural goal of profit companies: to generate profit.
In the second place, therefore, profit itself must no longer be considered only economic profit, but also social and / or environmental profit. The fans of the corporate sustainability issue invoke, more than rightly, the hype: where is the news? What has been added again compared to what has not been known for years (not many, to be honest). Continuing in the wake of substantiality, it is essential to emphasize that everything changes with the benefit company. The company self-obligates itself to achieve the goal of maximizing profit (or creating value, if you like): a profit that is no longer only economic! Seems little? In recent academic litereature the question was asked more than punctually as "Has social responsibility really conquered the business?". Summarizing the assumption, the question is still whether corporate sustainability is really being integrated into the business strategy. The idea of the benefit company is right here: the new challenge for companies, pursuing this tool, is to oblige themselves in this direction. Obligation, exposure, reorganization in order to pursue a broader goal of maximizing profit. All this can only be done by defining a sustainable business strategy.
Third, but not least, the challenge. How many Italian companies have then opted for this formula? To date there are 222 benefit companies. A drop in the sea. Why complicate life? Why stiffen your governance? Why submit to transparency obligations that today are not required ex lege - an example for all, the report that the benefit company will have to support annually to the financial statements (are we on the way to the mandatory sustainability report? I hope so)? The answer is disarming in its simplicity: because businesses as key players in the global world have an obligation to work towards sustainable development. The opposite is equally true. Let's think of a company, the most sustainable that can come to mind, whose criticism could be: "I already have my sustainability strategy, with certified and verifiable results. I don't need the name of benefit company! In the company we do not pay attention to form, but to substance! ". Very true. But there is a risk of continuing to be accused of greenwashing, window dressing and whoever has more. Marketing experts would say that doing something and not communicating it is like not doing it. So if you are a sustainable company, why not be a benefit company? Of course, greater burdens, but perhaps also greater economic, social and environmental returns for all, in search of new critical success factors.
The challenge is open and certainly difficult: but the direction drawn towards a new business model seems very interesting in order not to deserve at least a thorough reflection by everyone.